Frank Lloyd Wright's New York Guggenheim is a notoriously treacherous space to fill. All that curly white space spiralling up the atrium with nothing to break it up, no punctuation marks and the viewer forced up against the artworks on display because you don't really fancy stepping so far back that you topple over the scarily low balcony and tumble to the foyer below.

As for that central foyer, it's rarely used as a display area because the Guggenheim Foundation relies on it for holding corporate fundraising events (this is America, no government subsidies here). The curators of the Guggenheim must look at Tate Modern's Turbine Hall and weep in envy of its clean, monumental space that can be manipulated any which way, largely free of commercial constraints.

So the show that's now on at the Guggenheim is something of a rarity, because it makes full use of the foyer and fills the atrium of the rotunda, rather in the spirit of Tate Modern. The result is dramatic, engaging, entertaining and thought-provoking.

The Guggenheim spectacular is by Chinese artist Cai Guo-Qiang and the piece that fills the atrium is the culmination of his obsession with explosions and explosives. This has long been his thing, partly perhaps because China invented gunpowder. His work has included blowing up houses, making videos of pyrotechnic displays and lighting gunpowder trails across canvass, all of which can be seen at his Guggenheim retrospective, I Want to Believe.

In the main work, Inopportune: Stage One, Cai recreates the blowing up of a car. Nine white Chryslers are involved in the piece, beginning with one peacefully placed on the ground. The second is suspended in the air as if it has just been blown up there, with bright orange flashing lights extending from it like neon dreadlocks. In the sequence that follows, the car flips over twice as it ascends the atrium of the building, amid a riot of neon colour, until it lands, peacefully again and unscathed, at the very top of the spiral gallery.

The work is an obvious comment on events in Iraq and elsewhere, but it also falls in line with a theme that runs through the retrospective of Cai's art - that violence and beauty can, and often do, coexist. The cars are a very disturbing image as they rise above your head, making you feel as though you are standing in the middle of a Baghdad suicide bombing. But the colours of the neon explosion that he chooses to use - orange, changing to blood red and then to pastel pink and blue - are, yes, beautiful.

There's a great deal else in the retrospective worth seeing, notably his piece for the 1999 Venice Bienniale that recreates a Maoist socialist art project from 1965 that is both aesthetically and historically interesting. But Inopportune: Stage One merits the ticket price on its own. It's not every day that you see the Guggenheim managing to break out of the straightjacket of its own architectural skin.

• I Want to Believe, Cai Guo-Qiang's solo show is on at the Guggenheim museum in New York until May 28 2008